Fiscal Flexibility Comes at a Price

California schools use control over spending decisions to plug budget holes, special programs suffer, study finds.

In high school, reusing an English essay for an overdue history assignment would be considered cheating. Any student who got caught pulling this stunt would be in trouble.

And yet, here we have California school districts, which in 2009 were granted complete control over $4.5 billion that once funded 40 regulated programs. But with their newfound fiscal flexibility, local educators started shifting money away from these programs to plug budget holes. Is it cheating? Not technically, but according to a study of 10 diverse districts, adult education, special programs for gifted students and those who need the most academic help are in trouble.

"District actions were driven mostly by the need to plug deficits in their budgets, rather than from careful evaluation of programs and priorities," said Brian Stecher, a study co-author and senior social scientist at the RAND Corporation in a release. "How this continues to evolve will have important impacts on K-12 students across California."

The report revealed that spending on core instructional materials, including textbooks, dropped in most districts and special instruction activities for gifted students were trimmed or cut. According to researchers, these funds were often reallocated to the general fund. Some districts cut adult education programming by 60 percent.

“Deregulation led to cuts beyond the 20 percent made by Sacramento,” said UC Berkeley professor and study co-author Bruce Fuller to the Los Angeles Times. “Various student/family groups -- rich and poor -- are getting hit. Deregulation isn't the culprit necessarily. It's just that it allows for the erosion of state priorities.”

When lawmakers decided to shift authority over the funds to school districts, it was part of a compromise to get Republican support to pass the state budget, but California Watch reports that, two years later, the experiment has yielded some less-than-stellar results:

The funds comprise 6 percent of the total state education budget. According to the study, the new system is the largest effort to date to reduce the state's regulatory role in school administration, and to give local school officials more power to make their own spending decisions.

The study found that districts tended to "sweep" revenues previously intended for specific programs into their general funds to help them cover other costs.

While districts also cut programs for "gifted and talented" students, "our findings suggest that it is lower-achieving kids who are hurt most by these cuts," said Bruce Fuller, a UC Berkeley education professor and PACE co-director. Cuts included textbook purchases and programs promoting adult literacy and helping students pass the high school exit exam.

It would be short-sighted to blame the districts. As schools were hammered by budget cuts in the recession, local educators did what they knew to do to survive. Even now, school officials are calling for more control over other programs, including class sizes. And it’s a good idea to give school districts more power over their spending decisions. But it’s a case of a good idea at a bad time. Oakland Superintendent Tony Smith told the San Jose Mercury News that it’s “unfair this flexibility's coming at a time of diminishing resources."

Perhaps more importantly, the findings illustrate that lawmakers should have given more guidance to school districts on how to spend the money.

"The signals from lawmakers to school districts were not clear," Fuller said in the RAND release. "Despite possible advantages of granting local school boards and principals greater control over dollars, Sacramento has yet to articulate a clear plan for how this can work over time.”